The province had predicted a $12M surplus this year. Now, it looks like a $349M sinkhole.

WATCH: Saskatchewan government had budgeted a $12-million surplus this fiscal year, but a first-quarter update shows a $349-million deficit.

Saskatchewan’s books have taken a financial hit, with a projected $12-million surplus now forecasted to become a $349-million deficit.

In a first-quarter update Friday, the provincial government attributed the change in its financial outlook to a $172-million drop in revenue, mainly driven by the removal of the federal industrial carbon tax from SaskPower electricity bills.

Asked if Saskatchewan will continue to no longer collect the federal industrial carbon levy, Finance Minister Jim Reiter said he’ll continue to push Ottawa to remove the charge.

“This is an affordability measure,” he said. “We’re not charging the carbon tax to the citizens of Saskatchewan who are having affordability issues.”

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The first-quarter update says total revenue for the year is now forecast to be $20.9 billion and expenses are predicted to be $21.2 billion.

Reiter said the province is being affected by global economic uncertainty, but its overall financial position remains stable.

Saskatchewan’s net debt-to-GDP remains healthy while job growth is on track, the report says.

“We’re concerned about it. We’re going to keep a lid on expenses. But overall, we’re probably in the best financial situation of any province in the country,” Reiter told reporters Friday.

Revenue from non-renewable resources is also projected to fall by $30 million due to lower oil prices and a higher exchange rate.

The province is also spending an extra $80 million in costs related to the aggressive wildfires this year. Those expenses are expected to be addressed through special warrants on Monday.

The government also noted a $115-million increase in expenses related to year-end updates on pension accrual assumptions. Reiter said actuaries regularly review the data and adjust projections, largely based on changes to life expectancy.

“With people living longer, there’s a higher cost to the plans,” he said.

As the province begins preparing its next budget, Reiter said the focus will be on looking for savings.

“At the same time, we’re not going to do it at the expense of health care, education or the other services that people in Saskatchewan expect,” he said.

When the budget was tabled in March, NDP finance critic Trent Wotherspoon shredded a copy to signal his lack of confidence in it. On Friday, he said the latest update proved him right.

“Who could have guessed it?” he said with a shrug.

Reiter accused the NDP of contradicting itself: they’ve accused the province of cuts, but also say Moe needs to rein in spending.

“It’s kind of laughable, to be honest with you,” he said.